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CPC (TDS) Advisory on Use of Single Challans for Deposit of Tax Deducted at Source (TDS)

The other day, I had the task at hand to rectify some of the Tax Deduction at Source(TDS) Defaults, raised by Central Processing Cell [CPC (TDS)] Bangalore, for one of my clients. As soon as I logged into the TRACES website at www.tdscpc.gov.in, I was presented with a communication from the Central Processing Cell (CPC) mentioning that the client (actually, the Tax Deduction Account Number (TAN) of the client under discussion) is using multiple challans for depositing the Tax Deducted at Source with the Government and giving underneath the extract of the Advisory issued by the CPC (TDS) Team regarding use of single challans to deposit the tax deducted at source amount with the Government, which I'm going to take up for discussion and analysis in this article.

It was almost a year ago, when I first came across this Advisory Circular No - E/257 dated 12th September, 2014 and was pretty much excited at the effort, the Government was putting, to simplify TDS compliances. However, seeing that this Company, in particular, and many other business entities liable to deduct tax at source have not availed the benefits and relaxations provided through this advisory, disappointed me. I couldn't understand why these entities were not at all bothered by such a welcome step taken by Central Processing Cell of TDS department. This was mostly because they were not aware, since until recently, TRACES website was not much in use and communications from department were either not received (due to incorrect or common e-mail id submitted during the registration) or mostly ignored. Be it due to ignorance or otherwise, in this article we’ll be looking into details what are the relaxations provided in terms of compliances and why one should take the most out of this Advisory. Read through till the end to know what are the things that are dealt with, by this advisory and how one can make the most of it. I've also given the text of the bare advisory at the end of the post.

The advisory by CPC (TDS) dated 12th September, 2014 specially deals with three major points, all directed towards easing the compliance burden relating to deposit of Tax Deducted at Source with the Government.

1. During the earlier years, it was mandatory to pay tax deducted at source for each category/nature of payment through different challans. The same was the case for deduction of tax in respect to company and non-companies deductees. However, through this advisory and after implementing necessary rules in its Central Processing Cell (CPC) system, TDS department has now made it possible to pay all the tax deducted at source through a single challan and link deductees for various nature of payments, attracting TDS provisions under the Income Tax Act, 1961, to the same challan while filing the TDS Returns. Accordingly, necessary changes have been made in File Validation Utility and e-TDS return format (.fvu file), wherein, the section under which tax has been deducted can be separately mentioned for each deduction details and it needn't corroborate with the section mentioned in the challan linked therewith.

Let's look at this through a simple example. The challan used for payment of TDS relevant to Section 192 of the Act can also be used for the purpose of reporting tax deposited under Section 194, 194C, 194J, etc. of the Act and vice-versa.

How does this help?

This reduces the burden of making multiple online payments for deposits of TDS. It saves time as well as reduces the documentation burden. One may deposit the TDS vide only such number of challans as are required for the purpose of tracking or for internal controls purposes, if any (for example, separate challans may be wanted for TDS on salaries and TDS on Other Expenditures in view of two separate Forms (24Q and 26Q) required to be filed).

This is beneficial, especially when I link the same with the TDS Defaults case of the company aforementioned. In this particular case, there were many Short Payment defaults which were mostly attributable to the incorrect challan details entered by the person preparing/filing the TDS return. Now, since these pertains to old financial years, most of the challans are missing. Had there been only one challan, it could have been easily tracked and the issue had been resolved with ease.

2. Excess payment deposited to Government can now by utilized for the purpose of reporting tax deducted at source in the subsequent quarter as well in the subsequent year. Further, the same can also be used to close defaults, if any, during the immediately preceding year and/or immediately succeeding year.

For Example: If excess payment of Tax has been made in Quarter 1 of financial year 2013-14, the same can be used for the Quarters 2, 3 & 4 of F.Y. 2013-14 as well as for Q1 to Q4 of F.Y.2014-15. The excess amount of tax paid in Q1 of F.Y.2013-14 can also be used for payment of tax default of quarters Q1 to Q4 of F.Y.2012-13.

This saves the deductor from going through the cumbersome process of rectification of challan, in case Assessment Year has been wrongly quoted while depositing the TDS. Further, no revision or claim for refund would be required in case of excess deposits as the same could be utilized for filing subsequent returns.

3. Payment under a single TAN can be done through a single challan even though there are many branches of the organization. For example, a company having two branches, both maintaining separate set of books, can still deduct taxes at source and pay the same through a single challan, if the organization has registered only one Tax Deduction Account Number (TAN) for its business.

So, I urge all the persons out there who are responsible for deducting and paying taxes to government to take benefits of such advisory and minimize the number of challans to the minimal for their own convenience. It’ll definitely save you some time as well as make documentation and filing easier. Happy E-filing!

12th September, 2014

Circular No ‐ E/257

CPC (TDS) Advisory to deductors making TDS payment through multiple challans in a month

CPC (TDS) has issued an advisory communication to all deductors who have used multiple challans in a month for payment of TDS. In its advisory, CPC (TDS) has discussed about three main points:

a)Payment of Tax Deducted under different sections of the Income Tax Act, 1961

b)Payment of Tax Deducted for different Assessment Years

c)Different challans used for the purpose of reporting multiple Deductees associated with different branches with same TAN

Based on these information, deductors can use a single challan in a month towards TDS payment.

The issued communication has been given below:

Dear Deductor,

As per the records of the Centralized Processing Cell (TDS), it has been observed that you have used multiple challans in a month, for payment of Tax Deducted.

For Deductor’s convenience, CPC(TDS) has established processing logic in the system that can accept a Single Challan for reporting of Tax Deposited in following circumstances:

·Payment of Tax Deducted under different sections of the Income Tax Act, 1961:

oThe CPC (TDS) system gives credit of TDS against different sections of the Act, even though a specific section has been quoted in the challan.

oExample: The challan used for payment of TDS relevant to Section 192 of the Act can also be used for the purpose of reporting tax deposited under Section 194 of the Act also.

Situation prior to Financial Year 2012-13

Consumption of Challan in TDS Statement on the basis of Section quoted in the Challan details

Situation after Financial Year 2012-13

Section quoted in Challan, at the time of depositing Tax deducted/ collected is irrelevant for the purpose of consumption in TDS Statement.

·Payment of Tax Deducted for different Assessment Years:

oIn case tax has been deposited more than the required tax deducted at source for a particular Assessment Year, the excess amount of tax can be claimed in the following quarters of the relevant year. The balance amount if any, can be carried forward to the next year for claim in the TDS statement.

oExample: If excess payment of Tax has been made in Quarter 1 of financial year 2013-14, the same can be used for Quarter 2, 3 &4 of F.Y. 2013-14 as well as for Q1 to Q4 of F.Y.2014-15. The excess amount of tax paid in Q1 of F.Y.2013-14 can also be used for payment of tax default of Q1 to Q4 of F.Y.2012-13.

·Different challans used for the purpose of reporting multiple Deductees associated with different branches with same TAN:

oThe deductor may have used multiple challans for reporting multiple deductees associated with different branches, in the TDS Statement.

oA single challan can be used for the purpose of reporting Tax Deducted for such deductees.

oExample: If a Bank has multiple branches with same TAN, payment of Tax Deducted can be made by a single challan and all the deductees can be tagged using the same.

Based on the above information, you may use a single challan in a month towards payment of Tax Deposited. For any assistance, you can also write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

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